Trend or time-series analysis is another term used for ____ analysis

Multiple Choice

• Ratio

• Horizontal

• Vertical

• Diagonal

Vertical analysis refers to:

Multiple Choice

• Expressing each item in a financial statement as a percentage of the same base amount.

• Expressing each item in a financial statement in order of highest amount to lowest amount.

• Expressing each item in a financial statement as its trend over time.

• Expressing each item in a financial statement in order of highest importance to lowest importance.

The times interest earned ratio is classified as an indicator of a company's:

Multiple Choice

• Profitability.

• Long-term survival.

• Liquidity.

• Solvency.

Which of the following is an example of horizontal analysis?

Multiple Choice

• Comparing a balance sheet account with another balance sheet account at the same point in time.

• Comparing a balance sheet account with an income statement account.

• Comparing an income statement account with another income statement account at the same point in time.

• Comparing a balance sheet account over time.

Which of the following is an example of horizontal analysis?

Multiple Choice

• Comparing assets with equity.

• Comparing gross profit across companies.

• Comparing gross profit with operating expenses.

• Comparing the change in sales over time.

Jamble Co. reports cash of $40,000, accounts receivable of $60,000, inventory of $150,000, equipment of $350,000, and current liabilities of $100,000. What is Jamble's current ratio?

Multiple Choice

• 6.0.

• 1.0.

• 1.4.

• 2.5.

Which of the following is an example of conservative accounting?

Multiple Choice

• Adjusting the allowance for uncollectible accounts to a smaller amount.

• Recording the lowest possible warranty expense.

• Changing to a longer useful life for depreciating a long-lived asset.

• Recording inventory at lower of cost or net realizable value.

Sports Unlimited reports net income of $240,000, sales revenue of $24 million, and average total assets of $3 million. The asset turnover is:

Multiple Choice

• 12 times.

• 0.08 times.

• 8 times.

• 1.5 times.

amble Co. reports cash of $40,000, accounts receivable of $60,000, inventory of $150,000, equipment of $350,000, and current liabilities of $100,000. What is Jamble's acid-test ratio?

Multiple Choice

• 6.0.

• 1.0.

• 4.5.

• 2.5.

Which of the following is an example of an aggressive accounting practice in relation to the reporting of net income?

Multiple Choice

• Judging a contingent loss to be reasonably likely instead of probable.

• Estimating the useful life of a depreciable asset to be 10 years instead of 6 years.

• Assuming net realizable value of inventory remains above cost despite lack of sales of current inventory.

• All of the other answers are examples of aggressive accounting.

The Sports Addition reports net sales of $2 million, cost of goods sold of $1 million, operating expenses of $500,000, and other expenses of $100,000. If you were to perform a vertical analysis of this income statement, you would divide each of these income statement line items by:

Multiple Choice

• $400,000.

• $2,000,000.

• $100,000.

• $1,000,000.

Which of the following is an example of aggressive accounting?

Multiple Choice

• Recording the lowest possible warranty expense.

• The write-down of overvalued inventory.

• Adjusting the allowance for uncollectible accounts to a larger amount.

• Changing to a shorter useful life for depreciating a long-lived asset.

Which of the following ratios is more useful in evaluating solvency?

Multiple Choice

• Debt to equity ratio.

• Receivables turnover ratio.

• Inventory turnover ratio.

• Current ratio.

Conservative accounting practices refer to:

Multiple Choice

• Practices that result in reporting lower income, lower assets, and/or higher liabilities.

• Practices that reduce the amount of tax paid to federal, state, and local jurisdictions.

• Practices that result in greater employee training to avoid injuries.

• Practices that result in management taking fewer risky operating decisions that have the potential to result in losses.

The Sports Addition reports net sales of $2 million, cost of goods sold of $1 million, operating expenses of $500,000, and other expenses of $100,000. The Company's gross profit ratio is:

Multiple Choice

• 100%.

• 25%.

• 50%.

• 5%.